INVESTMENT MANAGEMENT AGREEMENT (Discretionary)

By this agreement, Client retains Advisor to provide investment management services to Client on the following terms and effective upon date of signature of Advisor:

Advisor will direct, in Advisor’s sole discretion and without first consulting Client, the investment and reinvestment of the assets in Client’s account (the Account, as defined as any and all accounts, regardless of custodian, that Client retains Advisor to provide investment management services) in securities and cash or cash equivalents. Client’s financial circumstances and investment objectives and any special instructions or limits that Client wishes Advisor to follow in managing the Account are described in the Client Data Form.  Advisor’s authority under this Agreement will remain in effect until changed or terminated by Client in writing.  See Section 14 for Client Responsibilities for disclosure of documents and information.

Advisor will arrange for the execution of securities transactions for the Account through brokers or dealers that Advisor reasonably believes will provide best execution. In selecting a broker or dealer, Advisor may consider, among other things, the broker or dealer’s execution capabilities, reputation, and access to the markets for the securities being traded. Advisor generally will seek competitive commission rates but will not necessarily attempt to obtain the lowest possible commission for transactions for the Account.

As a general matter, Advisor considers it appropriate to use the execution services of Charles Schwab & Co., Inc. for the purchase and sale of securities for managed client accounts, unless there are restrictions such as customer designation or legal requirements to the contrary. Advisor reserves the right, however, to utilize other broker- dealers that provide prompt and reliable execution at favorable security prices and reasonable commission rates. The best net price, giving effect to brokerage commissions and other costs, is an important factor in this decision, but a number of other judgmental facts are important as well. These include knowledge of negotiated commission rates currently available; the nature of the security being traded; the size and complexity of the transaction; the desired timing of the trade; the activity existing and expected in the market for the particular securities; confidentiality; and the execution; clearance and settlement capabilities and other relevant and appropriate services of the broker or dealer.

Transactions for each client account generally will be effected independently, unless Advisor decides to purchase or sell the same securities for several clients at approximately the same time. Advisor may (but is not obligated to) combine or “batch” such orders to obtain best execution, to negotiate more favorable commission rates or to allocate equitably among Advisor’s clients differences in prices and commissions or other transaction costs that might have been obtained had such orders been placed independently. Under this procedure, transactions will be averaged as to price and transaction costs and will be allocated among Advisor’s clients in proportion to the purchase and sale orders placed for each client account on any given day.

Instead of allowing Advisor to select brokers or dealers for the Account, Client may direct Advisor in writing to use a particular broker or dealer to execute all transactions for Client’s Account. In that case, Client will negotiate terms and arrangements for the Account with that broker or dealer, and Advisor will not seek better execution services or prices from other broker or dealers or be able to “batch” Client transactions for execution through other brokers or dealers with orders for other accounts managed by Advisor. As a result, Client may pay higher commissions or other transaction costs or greater spreads, or receive less favorable net prices, on transactions for the Account than would otherwise be the case.

Client authorizes and directs Advisor to instruct all brokers and dealers executing orders for Client to forward confirmations of those transactions to Custodian (as defined below) and Advisor. If Client wishes, Advisor will instruct the brokers and dealers that execute orders for Client’s Account to send Client all transaction confirmation, and Client’s monthly statements from the Custodian and the statements Advisor provides, to keep informed of the status of Client’s Account.

Advisor may give a copy of this Agreement to any broker, dealer or other party to a transaction for the Account, or the Custodian (as defined below) as evidence of Advisor’s authority to act for Client.

Custody of Account assets will be maintained with Charles Schwab & Co., Inc., or the independent custodian selected by Client and designated as (the “Custodian”). Advisor will not have custody of any assets in the Account. Client will be solely responsible for paying all fees or charges of the Custodian. Client authorizes Advisor to give Custodian instructions for the purchase, sale, conversion, redemption, exchange or retention of any security, cash or cash equivalent or other investment for the Account. Client also authorizes and directs Advisor to instruct Custodian on Client’s behalf to:

(a)  Send Client at least monthly a statement showing all transactions occurring in the Account during the period covered by the account statement, and the funds, securities and other property in the Account at the end of the period; and

(b)  Provide Advisor copies of all periodic statements and other reports for the Account that Custodian sends to Client.

Client will pay Advisor a fee for its investment management services. The fee will be a percentage of the market value of all assets in the Account on the last trading day of each calendar quarter (see section 22). The management fee is payable quarterly in advance. The calculation of quarterly fees will be based on the average daily balance during the previous quarter. Fee calculation commences the date that this agreement is signed (i.e., Account is opened).

In any partial calendar quarter, the management fee will be pro-rated based on the number of days that the Account was open during the quarter. Any unearned fee shall be refunded to client. Client understands that in the event account assets are invested in shares of mutual funds or other investment companies (“funds”), the assets will be included in calculating the value of the Account for purposes of computing Advisor’s fees and the same assets will also be subject to additional advisory and other fees and expenses, as set forth in the prospectuses of those funds, paid by the funds but ultimately borne by the investor. Anchor Bay Capital, Inc. may, in the normal course of business, compensate an investment advisor representative or a solicitor for maintaining the ongoing relationship with Client. It is hereby disclosed to Client that such compensation shall not otherwise increase any compensation that Client is obligated to pay. If Advisor is utilizing the services of a solicitor with regards to this Agreement, the solicitor shall be required to provide Client with a Solicitor’s Disclosure Statement that will specify the compensation Advisor will owe the solicitor.

Management fees will generally be due and payable each calendar year quarter. Advisor will send to Client a bill showing the amount of the management fee due, the Account value on which the fee is based and how the fee was calculated. Fees for asset management services are negotiable and generally range from 1.00% to 2.00% per year of the assets under management. The specific fee schedule for this agreement will be annotated in Section 22.

Anchor Bay Capital, Inc. generally prefers a minimum of $500,000 of assets under management to establish a new advisory account. However, the minimum may be waived at the sole discretion of Anchor Bay Capital, Inc. Certain related client accounts may be grouped for the purposes of achieving the minimum account size and determining the annualized fee.

NOTE: Certain exceptions to the fees may exist. If Client directs Advisor to affect an overnight delivery on the Client’s behalf wherein Advisor is charged an overnight delivery fee, Advisor will pass through that expense to the Client, and that expense will be billed to Client.

Advisor will value securities in the Account that are listed on a national securities exchange or on NASDAQ at the closing price, on the valuation date, on the principal market where the securities are traded. Other securities or investments in the Account will be valued in a manner determined in good faith by Advisor to reflect fair market value.

Except as otherwise agreed in writing or as required by law, Advisor will keep confidential all information concerning Client’s identity, financial affairs, and investments. Anchor Bay Capital, Inc. Privacy Policy provides more specific information regarding confidentiality and safe-guarding of personally identifiable information (PII).

Client understands that Advisor serves as investment manager for other clients and will continue to do so. Client also understands that Advisor, its personnel and affiliates (“Affiliated Persons”) may give advice or take action in performing their duties to other clients, or for their own accounts, that differ from advice given to or action taken for Client. Advisor is not obligated to buy, sell or recommend for Client any security or other investment that Advisor or its Affiliated Persons may buy, sell or recommend for any other client or for their own accounts.

This Agreement does not limit or restrict in any way Advisor or any of its Affiliated Persons from buying, selling or trading in any securities or other investments for their own accounts.

Advisor or its Affiliated Persons may provide services for, or solicit business from various companies, including issuers of securities that Advisor may recommend or purchase or sell for client accounts. In providing these services, Advisor or its Affiliated Persons may obtain material, nonpublic or other confidential information that, if disclosed, might affect an investor’s decision to buy, sell or hold a security. Under applicable law, Advisor and its Affiliated Persons cannot improperly disclose or use this information for their personal benefit or for the benefit of any person, including clients of Advisor. If Advisor or any Affiliated Person obtains nonpublic or other confidential information about any issuer, Advisor will have no obligation to disclose the information to Client or use it for Client’s benefit.

Advisor does not guarantee the future performance of the Account or any specific level of performance, the success of any investment decision or strategy that Advisor may use, or the success of Advisor’s overall management of the Account. Client understands that investment decisions made for Client’s Account by Advisor are subject to various market, currency, economic, political and business risks, and that those investment decisions will not always be profitable. Advisor will manage only the securities, cash and other investments held in Client’s Account and in making investment decisions for the Account, Advisor will not consider any other securities, cash or other investments owned by Client. Except as may otherwise be provided by law, Advisor will not be liable to Client for:

(a) Any loss that Client may suffer by reason of any investment decision made or other action taken or omitted in good faith by Advisor with that degree of care, skill, prudence, and diligence under the circumstances that a prudent person acting in a fiduciary capacity would use;

(b) Any loss arising from Advisor’s adherence to Client’s instructions; or

(c) Any act or failure to act by the Custodian, any broker or dealer to which Advisor directs transactions for the Account, or by any other third party. The federal and state securities laws impose liabilities under certain circumstances on persons who act in good faith, and therefore nothing in this Agreement will waive or limit any rights that Client may have under those laws.

This Section 10 applies if Advisor provides investment management services or investment advice, within the meaning of ERISA Regulation 2510.3-21(a), with respect to any assets of Client’s Account that are:

(a) Held in an account that is part of an employee benefit plan described in section 3(3) of the Employee Retirement Income Security Act (an “ERISA Account”);

(b) Held in an account that is part of any other plan described in Section 4975(e)(1)(A) of the Internal Revenue Code of 1986, as amended (the “Code”), or

(c) Held in an individual retirement account or other account described in Code Sections 4975(e)(1)(B) through (F), (each, a “Retirement Account” and collectively, “Retirement Accounts”). Advisor represents that it is registered as an investment Advisor under the Investment Advisors Act of 1940.

The Client acknowledges the following with respect to such investment management services or investment advice:

(a) Such services are authorized under the governing documents for such Retirement Accounts.

(b) Advisor is acting as a “fiduciary” within the meaning of Section 3(21)(A) of ERISA and/or Section 4975(e)(3) of the Code, as the case may be, with respect to the provision of such services to Retirement Account assets.

(c) The Client acknowledges that Advisor’s investment selection shall be subject to the governing documents of such Retirement Accounts and in the case of an ERISA Account or other plan Account, may be limited to the investment alternatives provided under the plan of which such Account is a part.

(d) If Advisor is providing discretionary investment management services with respect to Client’s ERISA Account, then Client hereby appoints Advisor as an “investment manager” as defined in Section 3(38) of ERISA with respect to the ERISA Account assets, and Advisor hereby accepts the appointment and agrees to provide investment management services for the ERISA Account.

(e)  In performing such services, Advisor does not act as, nor has it agreed to assume the duties of, a trustee or the administrator, and it has no discretion to interpret the Retirement Account governing documents, to determine eligibility or participation under the Retirement Account, or to take any action with respect to management (except as described in this Agreement), administration or other aspect of the Retirement Account.

(f)  Advisor does not reasonably expect to receive any compensation, direct or indirect, for such services other than the compensation described in this Agreement. If Advisor receives any other compensation for such services, it will (A) offset that compensation against its stated fees, and (B) will disclose to Client the amount of such compensation, the services rendered for such compensation, the payer of such compensation and a description of its arrangement with the payer.

(g)  In the case of an ERISA Account or other plan account, in the event the plan sponsor will not permit Advisor direct access to the Client’s plan assets to effect plan transactions, the Client acknowledges and understands (A) Advisor will not receive any communications from the plan sponsor or custodian, and it shall remain the Client’s exclusive obligation to notify Advisor of any changes in investment alternatives and restrictions pertaining to the assets; and (B) Advisor shall not be responsible for any costs, fees, damages, or penalties resulting from the Client’s failure to so notify the Advisor.

(h) Client independently made the decision to enter into this Agreement and was not influenced by Advisor’s status as a service provider under any other agreement.

(i) Client acknowledges that this Agreement contains the disclosure required by ERISA Regulation Section 2550.408b-2(c) (with respect to the provision of investment management services or investment advice to an ERISA Account) which disclosure Client has received reasonably in advance of entering into this Agreement.

The Client agrees that Advisor will not advise or act for Client in any legal proceedings, including bankruptcies or class actions, involving securities held or previously held by the Account or the issuers of these securities (“Legal Proceedings”).

The SEC has recently amended the Investment Advisors Act of 1940 to require investment advisors to notify their clients of its policy of the voting of proxies. As a firm policy, Anchor Bay Capital, Inc. does not vote proxies on client positions. It is the responsibility of each client to vote their proxies should they desire.

This Agreement will continue in effect until terminated by either party by written notice to the other. Termination of this Agreement will not affect:

(a) The validity of any action previously taken by Advisor under this Agreement;

(b) Liabilities or obligations of the parties from transactions initiated before termination of this Agreement; or

(c) Client’s obligation to pay advisory fees (prorated through the date of termination). Any fees collected in advance that are unearned will be refunded upon termination of this Agreement, which is defined to be 30 days from the date the non-terminating party receives written notice that the other party terminates.

Upon the termination of this Agreement, Advisor will have no obligation to recommend or take any action with regard to the securities, cash or other investments in the Account. An Advisory client will have a period of five (5) business days from the date of signing the investment advisory agreement to unconditionally rescind the agreement and receive a full refund of all fees.

If Client is an individual, Client represents that he or she is of the age of majority. If Client is a corporation, the person signing this Agreement for the Client represents that he or she has been authorized to do so by appropriate corporate action. If this Agreement is entered into by a trustee or other fiduciary, the trustee or fiduciary represents that Advisor’s investment management strategies, allocation procedures, and investment management services are authorized under the applicable plan, trust, or law and that the person signing this Agreement has the authority to negotiate and enter into this Agreement. Client will inform Advisor of any event that might affect this authority or the propriety of this Agreement.

Advisor’s advice is wholly contingent upon Client’s full and fair disclosure of various documents and information upon which the Advisor will rely upon to act in Client’s best interest. As such, Client agrees to:

(a) Provide Advisor with complete, current and accurate information in a timely manner, with the understanding the Advisor will be relying on such information without independent verification. 

(b) Informing Advisor in a timely manner of any changes to the Client’s financial situation which may affect the advice the Advisor renders or in the way in which the Advisor manages the Client’s account(s) as described in the Client Data Form.

(c) Informing the Advisor of any restrictions to be imposed with respect to the securities or other investment products to be held in the Client’s account(s) (e.g., not investing in certain industries, securities, countries, etc.).

If Client is a natural person, the death, disability or incompetency of Client will not terminate or change the terms of this Agreement. However, Client’s executor, guardian, attorney-in-fact or other authorized representative may terminate this Agreement by giving written notice to Advisor.

This Agreement will bind and be for the benefit of the parties to the Agreement and their successors and permitted assigns, except that this Agreement may not be assigned (within the meaning of the Advisors Act) by either party without the prior consent of the other party.

This Agreement will be governed by and construed in accordance with the laws of the State of California without giving effect to any conflict or choice of law provisions of that State, provided that nothing in this Agreement will be construed in any manner inconsistent with the Advisors Act, any rule or order of the Securities and Exchange Commission under the Advisors Act and, if applicable to the Account, ERISA and any rule or order of the Department of Labor under ERISA.

To the extent permitted by law, all controversies which may arise between the Client and Advisor concerning any transaction arising out of or relating to this Agreement, or the construction, performance, or breach of this or any other agreement between us whether entered into prior to, on, or subsequent to the date hereof, shall be submitted to arbitration under the then prevailing Securities Arbitration Rules of the American Arbitration Association. Judgment upon the award rendered in any such arbitration may be entered in any court having competent jurisdiction. Nothing stated herein shall constitute a waiver of any rights of which the Client may have under federal or state securities laws. Any such arbitration shall be held in San Diego, CA.

No person shall bring a putative or certified class action to arbitration, nor seek to enforce any pre-dispute arbitration agreement against any person who has initiated in court a putative class action; or who is a member of a putative class who has not opted out of the class with respect to any claims encompassed by the putative class action until:

(a) The class certification is denied; or

(b) The class is decertified; or

(c) Client is excluded from the class by the court. Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under this Agreement except to the extent stated herein.

Any notice, advice or report to be given to Advisor under this Agreement will be delivered in person, by U.S. mail or over- night courier (postage prepaid) or sent by facsimile transmission (with a hard copy sent by U.S. mail) to Advisor at its address on the first page of this Agreement (Attention: James Allen, President) or at such other address as Advisor may designate in writing. Any notice, advice or report given to Client under this Agreement will be delivered in person, by U.S. mail or overnight courier (postage prepaid) or sent by facsimile transmission (with a hard copy sent by U.S. mail) to Client at the address set forth below or at such other address as Client may designate in writing.

If any provision of this Agreement is or should become inconsistent with any law or rule of any governmental or regulatory body having jurisdiction over the subject matter of this Agreement, the provision will be deemed to be rescinded or modified in accordance with any such law or rule. In all other respects, this Agreement will continue and remain in full force and effect. No term or provision of this Agreement may be waived or changed except in writing, signed by the party against whom such waiver or change is sought to be enforced. Advisor’s failure to insist at any time upon strict compliance with this Agreement or with any of the terms of the Agreement or any continued course of such conduct on its part will not constitute or be considered a waiver by Advisor of any of its rights or privileges. This Agreement contains the entire understanding between Client and Advisor concerning the subject matter of this Agreement.

In accordance with the anti-money laundering provisions of the 2001 PATRIOT Act passed by Congress, Advisor has implemented an anti-money laundering program designed to help in the war on terrorism.

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The investment goals, restrictions and guidelines to be followed and the fees to be charged by Anchor Bay Capital, Inc. in managing your Account are set forth below.

Receipt of Disclosure Documents

I affirm that the following documents have been provided for my review:

Unless otherwise agreed with the Client, the Advisor may correspond with the Client, including providing the Client with all applicable statements and documentation regarding any Accounts by means of the internet or other electronic media.  Further, Client authorizes the use of electronic signature services in lieu of “wet signature”.  

Because of the inherent risks associated with the electronic transmission of information on the internet or otherwise, the Advisor does not guarantee the security and integrity of any electronic communications sent or received in relation to this engagement. While it is the Advisor’s policy to check its electronic mail correspondence with anti-virus software and other security software, the Advisor does not guarantee that transmissions will be free from infection and accepts no responsibility or liability for any damages as a result of communicating by means of the internet, e-mail or other electronic media.

Paper copies of written correspondance will be provided upon request or for those who do not have an email account or other means of receiving electronic communication. 

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This Agreement contains a provision requiring that all claims arising out of transactions or activities affecting Client’s account be resolved through arbitration. The Client is aware and understands that: arbitration is final and binding on all parties; the parties are waiving their right to seek remedies in court, including the right to trial by jury; pre-arbitration discovery is generally more limited than and different from court proceedings; the arbitration award is not required to include factual finding or legal reasoning and any party’s right to appeal or to seek modification of a ruling by the arbitrators is strictly limited; and the panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry.

By signing this Agreement, the Client agrees to its provisions and acknowledges receipt of the Advisor’s disclosure documents and agrees to having documents delivered electronically. The Client also certifies that all information provided on the Client Data Form is true and correct. The client accepts the investment management fees disclosed in Section 22.

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